Political Science

That is the topic of my latest Bloomberg column.  Excerpt:

Virginia is the location of the Pentagon, and military and national intelligence establishment have been a cash cow for the state. That has boosted prosperity and minimized cyclical downturns, two factors that help alleviate racial and interethnic tensions, in turn raising upward mobility for immigrants. The state has also encouraged real estate growth and created a favorable environment for small and midsize businesses. For all the criticism of ugly strip malls, they are an ideal place for immigrants to start a new business.

The result has been a strong upper middle class rather than a playground for billionaires. That offers immigrants a good chance to move up the social and income ladders fairly quickly.

Almost 70 percent of Virginia immigrants have settled in Northern Virginia, very close to Washington and Maryland. The D.C. metropolitan area, due to the primacy of politics, has attracted migrants and temporary residents for a long time, including American-born citizens from other states. There is little stigma to being an outsider or new arrival.

When I first moved to Northern Virginia in 1980, it was common to see Confederate flags and to hear “good ol’ boys” talk with racist overtones. Today the region is a multicultural success, has some of the best schools in the country, and is renowned for its globe-spanning ethnic food.

Another big part of the Virginia economy has been the significant naval presence in the Norfolk area. In addition to creating lots of jobs, the U.S. military long has been one of the most successfully integrated and tolerant institutions in the country, setting a good workplace and cultural precedent.

It also helps that Virginia’s immigrants are a mix of nationalities, with no one dominant ethnic group. That has encouraged broad-based assimilation, and prevented any single, easily identifiable group from being a source of social tensions.

Do read the whole thing.

The Economist has a lengthy and very informative article on this, here is one bit:

Another candidate to be the first ZEDE is a public-private partnership with Canadian investors to create an “energy district” in Olancho department, where wood would be harvested for fuel. The ZEDE itself would be confined at first to a 1.6 square km (0.6 square mile) patch, which will be occupied by a power station. But it could eventually expand to an area covering 8% of Honduras’s territory and including 380,000 people. HOI, a Christian NGO based in the United States, is to provide health care and education from the outset in this “area of influence”.

…Even now, just how ZEDEs will work is a matter of argument among their supporters. The law places effective control in the hands of investors and a “technical secretary” who will administer each zone (and must be a Honduran citizen). They are answerable to an independent “commission for best practices” (CAMP). Civil and criminal cases will be adjudicated by special ZEDE courts, though it is not clear whether each zone will have its own or whether they will join a single parallel system. They could employ foreign judges to hear civil and criminal cases, just as Honduran football teams hire foreign players, suggests Mr Díaz. A “tribunal of individual rights”, guided by international conventions, will protect residents. Its decisions can be appealed to international courts.

But this governance structure is not settled; participants do not agree on what has been decided or even on who is part of it. The original CAMP, appointed by Mr Lobo, had 21 members, including Grover Norquist, an American anti-tax campaigner, Richard Rahn, then of the libertarian Cato Institute in Washington, DC, and Mark Klugmann, a former speechwriter for Ronald Reagan. This body met just once, in March 2015, on the resort island of Roatán.

In short, the prognosis is still unclear, which I take to be bad news.  In any case, there is much more at the link.

That is my latest column for Bloomberg, here is one bit from it:

In other words, a country can experience hundreds of years of bad events, but if it succeeds in attaching itself to a benevolent, moderately competent protector, it still can have a fantastic future of peace and prosperity, even if it does not stand on the global cutting edge.

And:

If Macedonia doesn’t make it into the EU, it is not difficult to envision a future where the country ends up being picked apart by a variety of pressures from Russia, Serbia, Bulgaria, Albania and Greece, in some unknown combination. Keep in mind that an independent Macedonian nation has existed for only a few decades over the course of many centuries, and so its continuing existence cannot be taken for granted.

And:

But when it comes to economic development, don’t just look at demographics or economic policy. Ponder the hegemon.

I wish to thank J. and P. for conversations that spurred some of these thoughts.

Recently Macedonia signed a “good relations” treaty with Bulgaria, so Macedonia cannot be said to have bad relations with all of its neighboring countries; they get along OK with Kosovo too.  Israel is another possible candidate, although it could be argued that de facto relations with Egypt are not so bad.  How about Palestine?  Qatar is a country surrounded by hostile powers, and for the time being they win this designation.

Belarus is on increasingly bad terms with Russia, but Russia has quite a few adjoining countries, and I am not sure if all of those relations are so bad.  China has frosty relations with many neighbors, although with Russia you would call it mixed and “not yet negative.” And relations with “the Stans” are not terrible.  They don’t like North Korea so much any more, even if they won’t topple it.

I think of Chile as bordering on a hostile Bolivia, but relations with Argentina are acceptable, even if Porteños look down on the Chileans for being provincial.

Africa?

Then there are countries with only one neighbor, such as how Haiti and the Dominican Republic rather uncomfortably share the island of Hispaniola.  Relations across Central America seem to have improved considerably.

Which countries are the other contenders for this honorary designation?

Amanda Lea Robinson has a new paper “Nationalism and Ethnic-Based Trust: Evidence from an African Border Region,” here is her main result:

In diverse societies, individuals tend to trust coethnics more than non-coethnics. I argue that identification with a territorially-defined nation, common to all ethnic groups, reduces the degree to which trust is ethnically bounded. I conduct a “lab-in-the-field” experiment at the intersection of national and ethnic boundaries in Malawi, which measures strength of national identification, experimentally manipulates national identity salience, and measures trust behaviorally. I find that shared nationality is a robust predictor of trust, equal in magnitude to the impact of shared ethnicity. Furthermore, national identification moderates the degree to which trust is limited to coethnics: while weak national identifiers trust coethnics more than non-coethnics, strong national identifiers are blind to ethnicity. Experimentally increasing national identity salience also eliminates the co-ethnic trust advantage among weak nationalists. These results offer micro-level evidence that a strong and salient national identity can diminish ethnic barriers to trust in diverse societies.

Hat tip goes to Ben Southwood.

Students in India who cheat on a simple laboratory task are more likely to prefer public sector jobs.

Furthermore:

…cheating on this task predicts corrupt behavior by civil servants, implying that it is a meaningful predictor of future corruption. Students who demonstrate pro-social preferences are less likely to prefer government jobs…

That is from Dishonesty and Selection into Public Service: Evidence from India, by Rema Hanna and Shing-Yi Wang.  Here are ungated copies.

…most important of all was the gulf between the man and the national media, who could not understand each other — Romney’s billboards in New Hampshire read THE WAY TO STOP CRIME IS TO STOP MORAL DECAY; he could not understand why newsmen found the slogan funny; and they could not understand what he meant by moral decay.

That is from the still-engaging Theodore H. White The Making of the President 1968.  And here is Rod Dreher on crime and morality.

The Economist reports on the work of three GMUers, Robert Warren Anderson, Noel Johnson, and Mark Koyama, all leaders of the next generation of GMU economists and up-and-coming stars:

A new study* by Robert Warren Anderson, Noel Johnson and Mark Koyama suggests that, historically, economic shocks were more strongly associated with outbreaks of violence directed against Jews than scholars had previously thought. The authors collected data for 1,366 anti-Semitic events involving forced emigration or murderous pogroms in 936 European cities between 1100 and 1800. This was then compared with historical temperature data from a variety of sources, including tree rings, Arctic ice cores and contemporary descriptions of the weather.

Cold spells hit medieval agriculture hard: a one-degree Celsius fall in temperatures reduced the growing season by up to four weeks. Lower yields caused widespread economic pain: up to 57% of people relied on farming for work in medieval England, for instance. The authors find that a fall in average temperatures of only a third of a degree increased the probability of a pogrom or expulsion by 50% over the next five years. They argue that violence against Jews was not simply caused by religiously-motivated anti-Semitism: “The Jews were convenient scapegoats for social and economic ills.”

The authors find that economic shocks had greater effects where soils were less suited to farming or where governments were weaker, and so less able to stop violence.

Here is a link to the published paper.

In the place of U.S. support, Japan has offered to step in.

“Japan is the only state willing to help India in its Indian Ocean project to develop islands there,” said Abhijit Singh, head of the Maritime Policy Initiative at the Observer Research Foundation, a New Delhi think tank. The reason, he added, is that other nations—notably the U.S.—consider offering such help too provocative to China.

Here is the full WSJ story.

That is the theme of my latest Bloomberg column, here is the concluding bit:

As for 2017, I have been concluding that I should raise my relative opinion of business and lower my view of government. I’m still waiting for millennials — a relatively left-leaning generation — to reach a similar position.

Sometimes we forget about companies, in part because it is the business of business that we don’t notice it too often for the wrong things. And don’t forget that most of the weird stories about Trump or politics refer to a pretty small slice of our world, further amplified by social media.

In a war between the boring and the weird, don’t be surprised if the weird commands the most notice. But the normal and the boring have enormous powers of inertia on their side, not to mention human goodwill, and they are doing better than it might at first seem. So if you think America is falling apart, give the corporate world another look.

I believe that right now we are all too entranced by the “news of the weird.” On the side of business, there are problems with productivity growth and perhaps excess monopoly, but arguably those are about the most normal problems you could have.  I suspect the world of American business is these days a bit too normal, and could use a marginal dose of some more Elon Musk.

As you might expect, they came up with a good photo for the column.

Here is the government’s own answer:

No.  The President’s clemency power is conferred by Article II, Section 2, Clause 1 of the Constitution of the United States, which provides:  “The President . . . shall have Power to grant Reprieves and Pardons for Offenses against the United States, except in Cases of Impeachment.”  Thus, the President’s authority to grant clemency is limited to federal offenses and offenses prosecuted by the United States Attorney for the District of Columbia in the name of the United States in the D.C. Superior Court.  An offense that violates a state law is not an offense against the United States.  A person who wishes to seek a pardon or a commutation of sentence for a state offense should contact the authorities of the state in which the conviction occurred.  Such state authorities are typically the Governor or a state board of pardons and/or paroles, if the state government has created such a board.

Solve for the equilibrium!

I thank J. for a relevant pointer.

I would like to see building deregulators pay more attention to this aspect of the problem:

The next step would be transferring ownership of these assets to what Detter and Fölster call an “urban wealth fund”. Ideally, all publicly owned assets in a given city would be placed in the fund, regardless of whether they technically belong to the county, the city, the school system, the state or some other entity. The local governments would each have shares in the fund proportionate to the value of the assets they contributed. These shares would be reported as assets on the municipal balance sheets.

Independent managers with experience in real estate and finance would be charged with maximising the value of the portfolio. Cities would receive dividends from their stakes in these commercial properties and have the option to borrow against or sell their shares if desperate for cash.

Public officials would then have to decide whether it makes sense to pay fair market rents to stay in their properties. Moving offices might be inconvenient for government workers but the potential gains for taxpayers and citizens who depend on government services would be far greater. Leasing space in subway stations to shops might detract from the “historic” character of the US’s barbarous public transit systems, but the revenues could fund needed improvements, such as ventilation, without the need for debt or higher passenger fares.

That is from Matt Klein at the FT.  Note that profit maximization does not have to be the sole goal of such funds.

Here is the abstract of a new paper by Davide Cantoni, Jeremiah Dittmar, and Noam Yuchtman:

The Protestant Reformation, beginning in 1517, was both a shock to the market for religion and a first-order economic shock. We study its impact on the allocation of resources between the religious and secular sectors in Germany, collecting data on the allocation of human and physical capital. While Protestant reformers aimed to elevate the role of religion, we find that the Reformation produced rapid economic secularization. The interaction between religious competition and political economy explains the shift in investments in human and fixed capital away from the religious sector. Large numbers of monasteries were expropriated during the Reformation, particularly in Protestant regions. This transfer of resources shifted the demand for labor between religious and secular sectors: graduates from Protestant universities increasingly entered secular occupations. Consistent with forward-looking behavior, students at Protestant universities shifted from the study of theology toward secular degrees. The appropriation of resources by secular rulers is also reflected in construction: during the Reformation, religious construction declined, particularly in Protestant regions, while secular construction increased,especially for administrative purposes. Reallocation was not driven by pre-existing economic or cultural differences.

For the pointer I thank the excellent Kevin Lewis.

Chad R. asks me:

Which of our public policy institutions are working well right now?

It seems there are plenty of takes about *why* our institutions are under extreme stress, but precious few about which are still working properly.

The Supreme Court comes to mind…

I say plenty of them are working well:

1. The CBO remains independent and effective, even though I think they are treating the health care mandate incorrectly and overestimating its impact.

2. As for the courts, they remain powerful and effective.  But note: while I strongly disagree with Trump’s travel ban, some of the lower courts overstepped their bounds by taking away too much power from the executive, relative to law.  It’s as if the courts have become too strong — perhaps optimally so — in a kind of overshooting model.

3. The Senate.  Even though one party controls all branches of government, a variety of bad health care bills have come to naught, and that is after many earlier votes to repeal Obamacare.  It is less clear to me how the House is working, but that’s why we have bicameralism.  I don’t care how stupid you might think the process is, so far it is generating acceptable results.  Yum, yum, yum, I just love that democracy!

4. The media as investigators have been excellent, though as summarizers of what is really going on I see their performance as much weaker, due to selective reporting.

5. Think tanks: the lack of Trump infrastructure at this level has raised my estimate of think tank importance.  That said, I am not sure how many think tanks are influencing policy right now, but if nothing else the inability to have or assemble a good think tank is indeed important.

6. The bureaucracy, for the most part, including the Fed.  Admittedly, some parts of the bureaucracy, such as the State Department, are being throttled by the Executive branch.

What’s not working well?

I say the executive branch and the White House.  Destroying or limiting the value of alliances is one of the easiest things for a blundering president to do.  I also see a significant opportunity cost from not having a legislation-oriented, detail-savvy White House.  Still, they are doing a good job on regulatory reform and an excellent Supreme Court appointment has been made.

Most of all, the appointments process is not working well, some of that being the fault of the Senate too.

The main lesson?  American government isn’t quite the train wreck you might think, and I haven’t even touched on the states, counties, and cities.

On a recent episode of the popular podcast Chapo Trap House, co-host Will Menaker used a memorable metaphor in addressing calls for unity on the left. “Republicans in control of politics, that’s the problem,” he began. “However, to the pragmatists out there and the people who don’t like purity in politics, yes, let’s come together. But get this through your fucking head: You must bend the knee to us. Not the other way around. You have been proven as failures, and your entire worldview has been discredited. You bend the knee to us and then let’s fucking work together to defeat these things, not with fucking means testing or market-based solutions but with a powerful social democratic message.”

That is reported by Jeet Heer at The New Republic.